Iranian police clash with protesters over currency plunge

October 4, 2012 – IRAN – Riot police clashed with demonstrators and arrested money changers in Tehran on Wednesday in disturbances over the collapse of the Iranian currency, which has lost 40 percent of its value against the dollar in a week, witnesses said. Police fired tear gas to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters denounced President Mahmoud Ahmadinejad as a ‘traitor’ whose policies had fuelled the crisis. In a clampdown on the unofficial foreign currency market, a number of traders selling dollars were arrested after authorities ordered security forces to take action against those it sees as speculators. The rial has hit record lows against the U.S. dollar almost daily as Western economic sanctions imposed over Iran’s disputed nuclear programme have cut Iran’s export earnings from oil, undermining the central bank’s ability to support the currency. Panicking Iranians have scrambled to buy hard currency, pushing down the rial whose increasing weakness is hurting living standards and threatening jobs. “Everyone wants to buy dollars and it’s clear there’s a bit of a bank run,” said a Western diplomat based in Tehran. “Ahmadinejad’s announcement of using police against exchangers and speculators didn’t help at all. Now people are even more worried.” The protests are seen as posing a threat to Ahmadinejad rather than the government, which is expected to put a stop to the foreign exchange black market, pump in funds to stabilize the currency and prevent the protests from spreading. Tehran’s main bazaar, whose merchants played a major role in Iran’s revolution in 1979, was closed on Wednesday. A shopkeeper who sells household goods told Reuters that currency chaos was preventing merchants from quoting accurate prices. A computer dealer said he had halted sales because of the volatility in the currency market. “The same product can change price within an hour,” he said by telephone. The protests centered around the bazaar and spread, according to the opposition website Kaleme, to Imam Khomeini Square and Ferdowsi Avenue — scene of bloody protests against Ahmadinejad’s re-election in 2009. Protesters shouted slogans like “Mahmoud the traitor – you’ve ruined the country” and “Don’t fear, don’t fear – we are all together,” the website said. The semi-official Mehr news agency said the largest gatherings were around the currency-trading centers of Ferdowsi Avenue, the Istanbul intersection, and Imam Khomeini Square and that security forces had been deployed to disperse the protests. The national currency dived to a record low on Tuesday to 37,500 to the U.S. dollar in the free market, from about 34,200 at the close of business on Monday, foreign exchange traders in Tehran said. On Monday last week, it traded at around 24,600. Ahmadinejad on Tuesday blamed the crisis on the U.S.-led economic sanctions on Iran and insisted the country could ride out the crisis. He said security forces should act against 22 “ringleaders” in the currency market. –Reuters

Pushing for an economic collapse: The U.K., France and Germany are pressing for new sanctions to bring Iran’s economy to its knees and curb its nuclear ambitions, according to several European diplomats, as rioting over the country’s tumbling currency suggests the existing sanctions are taking a toll. In a confidential letter to the 27 EU member states, portions of which were provided to Bloomberg News, the foreign ministers of Europe’s three largest economies criticized Iran for its lack of openness over its nuclear program and called for raising the cost to Iran’s leaders of refusing to abandon what the U.S., Europe and Israel say is a covert nuclear weapons program. Iran says its program is solely for civilian energy and medical research. Ahead of the next EU foreign ministers’ meeting Oct. 15 in Luxembourg, European diplomats and finance officials are discussing proposals to tighten the vise on Iran in the energy, finance, trade and transportation sectors, according to four European officials who all spoke on condition of anonymity because of diplomatic protocol. –Bloomberg